The plaintiff was the owner of a factory. In September 1955 an employee of the defendant, a civil engineer, operating an excavator on the premises of M, an enterprise engaged in graphic work, damaged a subterranean power cable belonging to the electricity works in E, which led from Ms works to the plaintiffs factory. At approximately 9.40 a.m. on 18 June 1956, another employee of the defendant excavating a pit intended for an oil-tank cut the cable once again at a distance of about 60 metres behind the previous break. As a result production in the plaintiffs factory was interrupted until 6.30 a.m. on 19 June.

The plaintiff contended that the power cable, which from the place of the break onwards served only the graphic enterprise and his factory, was part of his enterprise from an economic point of view. The defendant, in cutting the cable had interfered illegally and culpably with his enterprise and was liable for the damages caused by the interruption of production. Alternatively, he contended that the defendant had failed to observe the necessary care for the safety of others. The defendant argued that the plaintiffs enterprise had only been indirectly affected by the cutting of the cable and that only direct interference would have rendered him liable. He also contended that he had exercised the necessary care in selecting and supervising his employees.

The Landgericht in Bielefeld and the Court of Appeal of Hanover allowed the claim. Upon a further appeal the claim was dismissed for the following

Reasons

1. The courts below both held the defendant liable in damages on the ground that by cutting the power cable leading to the plaintiffs factory with the result that the supply of power was interrupted, the defendant had illegally and culpably interfered with the plaintiffs established and active commercial or industrial enterprise. The Court of Appeal held the defendant liable on the basis of § 823 I BGB in conjunction with § 831 BGB in as much as the defendant had failed to produce sufficient evidence to exculpate himself. It also held him liable on the basis of § 823 I BGB alone for having failed to observe the required care for the safety of others (Verkehrssicherungspflicht).

The appellant objects against the treatment of the cutting of the power cable as an interference with an established and active commercial or industrial enterprise.

The appeal must be successful in the result

(a) The Reichsgericht has acknowledged in the constant practice that the right in an existing commercial or industrial enterprise is another right in the meaning of § 823 I BGB.

As early as its decision RGZ 58, 29 it has regarded the right in an established and active commercial or industrial enterprise as an individual right which can be violated directly; any direct disturbance or interference with the commercial or industrial enterprise is, therefore, a violation of a right protected by § 823 I BGB. During the ensuing period the Reichsgericht at first accorded the protection of § 823 I BGB to an established and active commercial or industrial enterprise only if interference involved the existence of the commercial or industrial enterprise; that is to say if an enterprise was in fact obstructed, if it was alleged to be illegal, or if its restriction or closure was demanded; sometimes the Reichsgericht has expressed it in the terms that the bases of the commercial or industrial enterprise must be directly affected [references]. According to this practice, which was developed in dealing with problems of competition and boycott, acts which damaged the commercial or industrial enterprise indirectly only were not regarded as illegal acts in the meaning of § 823 I BGB. Examples are: if the person carrying on a commercial or industrial enterprise is only deprived of economic profit [references], or if the relationship with suppliers is affected detrimentally [reference] or that with the range of customers [reference], or, finally, if only the prospect of gain is diminished or endangered [references]. The protection of § 823 I BGB was granted in those cases especially where the termination of the commercial or industrial activity of another was demanded on the ground that the activity violated an industrial or commercial right protected by law of the person seeking the termination (design, patents), and it appeared later on that no such right existed, the allegation to this effect having been made falsely due to the objectors negligence at least [references]; further, e.g. if in the course of a boycott, clients had been prevented from entering an eating-house by picketing and by force [references].

The strict requirements for protecting the right in an established and active commercial or industrial enterprise were relaxed by the subsequent practice of the Second Civil Division of the Reichsgericht, the final indication appeared already in the decision of 7 June 1929 [reference] where an order of the local Sickness Insurance Office that no payments would be made for certain branded medicines was treated as an act endangering deliberately the commercial or industrial enterprise engaged in the production of the branded medicines, seeing that the full effect of the order of the local Sickness Insurance Office was to force the producer to curtail production. In its decision of 9 October 1934 [reference] the Second Division abandoned clearly the principle that only the existence of the enterprise was being protected and expressed the view that it sufficed to render § 823 I BGB applicable in making the law concerning trademarks and competition if a claim for damages was based on a culpable interference with the commercial or industrial activity of another. This was confirmed by the same division in its decision of 19 December 1938 [references]; the court stated there that in so holding it took into consideration that every owner of an enterprise could demand to be protected against illegal disturbances which prevented his enterprise from devoting its full potential based on the totality of its compo-nents and means employed, even if the disturbance did not threaten the exist-ence of the enterprise as such [references]. The Second Division considered further [references] whether the same principle did not apply also outside the sphere of the law of competition and designs. In its decision of 3 October 1936 [reference] the First Division of the Reichsgericht expressly approved the view of the Second Division that for the purpose of applying § 823 I BGB a direct attack on the existence of the enterprise was not required where the commercial or industrial activity of another had been interfered with culpably (but see to the contrary the Fifth Division of the Reichsgericht [reference]).

According to the practice of the Bundesgerichtshof, the protection of § 823 I BGB is granted in respect of any interference with the right of an established and active commercial or industrial enterprise, if it constitutes a direct interference with the commercial or industrial activity, even if it does not involve competition and industrial property rights [references]. In the decision cited here [reference] it is stated that the right in an existing commercial or industrial enterpriselike ownershipmust be protected by § 823 I BGB against direct interference not only in its substantive existence but also in its various manifestations, which include the entire sphere of commercial and industrial activity. This practice must be followed.

(b) In consequence of the practice of the court to range the right in an existing or commercial industrial enterprise among the number of other rights mentioned in § 823 I BGB this right is placed on an equal footing for the purpose of protection with the other protected legal interest and rights enumerated there, i.e. life, health, liberty, and property. Therefore it must also be examined in the case of a violation of a right in an existing commercial or industrial enterprise whether its consequences, for which damages are claimed, are covered by the protection of the law (the decision of this division [references]). Admittedly in so far as the protection of an established and active commercial or industrial enterprise is concerned, the question is not unlike the above-mentioned fundamental judgment of this division regarding the limits of liability, as to whether damage complained of resulted from the violation of a protected interest, the safeguarding of which is the purpose of the law. The reason is that when § 823 I BGB was formulated, the legislature had not yet envisaged the protection of established and active commercial or industrial enterprises. In the present case, the question as to the limits of liability is therefore to be considered and decided mainly from the angle as to what is the object of protection accorded by the practice of this court to established and active commercial or industrial enterprises.

The notion of a commercial or industrial enterprise includes everything which in its totality enables the enterprise to develop and to operate in the economy. Thus it includes not only the premises and the land used by it, machinery and tools, furniture and stock but also business connections, the circle of clients, and debtors. The protection accorded and gradually extended by the practice of the courts to established and active commercial or industrial enterprises is intended to safeguard the enterprise against legal interference with its economic activity and functioning. Even if the Bundesgerichtshof in a previous decision [reference] regarded the individual situation in which the commercial or industrial activity is carried out as determining the extent of the area of commercial or industrial activity, nevertheless all the cases in which the Bundesgerichtshof had held that a right in an established and active commercial or industrial enterprise had been violated involved the protection of those characteristics of a commercial or industrial enterprise which are specifically its own. The objects of protection are the substance and the emanations of the commercial or industrial enterprise to the extent that they constitute its natural and characteristic features of economic and technical activities.

(c) Then as now, as the Court of Appeal has observed correctly, the interference with the sphere of the commercial or industrial enterprise must be direct if § 823 I BGB is to apply [references]. The plaintiff is wrong when he refers to the decision of the Reichsgericht [references] in support of a view to the contrary; it was held there only that to restrict the right in an established and active commercial or industrial enterprise to the protection of its substance was too narrow and that every culpable interference with the commercial or industrial activity of another was sufficient to render § 823 I BGB applicable; the requirement that the interference must be direct was not affected thereby. It is true, of course, as the Court of Appeal has stated, that the notion of direct interference has not been defined by the practice of the courts. Baumbach and Hefermehl [references] point out correctly that the difficulties in drawing the line between direct and indirect interference are particularly great in the case of such a complex legal term as enterprise. Contrary to the view of the appellant the purely linguistic distinction between indirect and direct cannot yield the criteria for the necessary delimitation of these notions. The question as to when interference with the right in an established and active commercial or industrial enterprise is direct cannot be answered either by reference to the doctrine of causality alone, and the absence of so-called intermediate causes is also not decisive, as the Court of Appeal has pointed out in agreement with the practice of the Bundesgerichtshof [references; contra RGZ 163, 21, 32 where the court relied on directness of the causal nexus; similarly the Court of Appeal of Munich, 21 March 1956, NJW 1956, 1769]. The suggestion of Larenz [reference] in his note to the aforementioned decision of the Court of Appeal of Munichupon which both parties rely in support of their legal positiondoes not lead to a sufficiently clear limitation of direct and indirect interference. Larenz argues that whether an interference is direct must be determined teleologically, i.e. in the sense that the act of interference must have the purpose of restricting the commercial or industrial activity, and that, consequently, the purpose must disclose the direction towards inflicting damage upon the commercial or industrial enterprise. Inasmuch as Larenz wishes to treat as direct every interference with a commercial or industrial enterprise the purpose of which is, or at least could have been, to reduce or to affect detrimentally the difficulties become obvious immediately when the interference was due to negligence. Nevertheless it is not possible to agree with Baumbach and Hefermehl [references] that in view of the existing difficulties of delimitation the requirement that the interference must be direct should be abandoned and that instead the effect of the interference upon the sphere of activity should be decisive in favour of the retention of the requirement of directness [references].

The Court of Appeal, relying on the decision of this Division dated 14 April 1954 [reference] is of the opinion that the notion of directness was characterized by its objective. From this it concluded that a workable delimitation could be established in the case of intentional acts; if they were committed negligently it was sufficient if in the circumstances the act might have been intended to affect the commercial or industrial enterprise adversely and the person so acting had been aware of this consequence of his act, but had hoped that the consequence would not materialize. The Court of Appeal held that in the present case a negligent interference causing liability to pay damages had in fact taken place. This Division in the decision cited above has held that an act to constitute a violation of the right in a commercial or industrial enterprise must somehow be directed against the enterprise as such. For this reason this Division did not regard as illegal interference in a commercial or industrial enterprise the fact alone that one unfounded claim for the restitution of a parcel of land attached to the enterprise had been raised by a claimant seeking restitution under the Military Government no. 52, resulting in the administration of the land by trustees. The reason was that the attack was directed against the owner of the enterprise, but not against the enterprise itself, even if thereby it may have caused damages to the commercial or industrial enterprise indirectly. Similarly it is not an interference with commercial or industrial activities if as a result of injuries to persons an enterprise is deprived of the personnel which is indispensable for its operation [reference]. These decisions which require that in order to be covered by § 823 I BGB an attack must be directed against the industrial or commercial enterprise itself indicate the general approach of the predominant practice. It is to avoid an excessive extension of the right in an established and active commercial or industrial enterprise which would run counter to the casuistic enumeration in the German legal system of situations constituting torts. Voices have been raised by courts and in legal literature which advocate a return to the older practice of the Reichsgericht according to which only an interference with an industrial or commercial enterprise which affects its substance is to be regarded as an attack against an absolute right [references]. These opinions are clearly inspired by the view that, in the words of Lehman [reference], the recognition of an excessively broad general protection of commercial or industrial enterprise might easily lead to a surreptitious creation of rules.

Certainly the protection which was originally accorded only to the existence of a commercial or industrial enterprise was extended when subsequently the Reichsgericht and then the Bundesgerichtshof in a constant practice have held that every illegal direct interference with commercial or industrial activity constitutes a violation of an established and active commercial or industrial enterprise which is protected by § 823 I BGB even if the attack is directed not against its existence but against any one of its emanations. This does not mean that by the circuitous route of protecting commercial or industrial enterprises protection is being granted to contractual rights which, in contrast to absolute rights, only bind certain persons and are therefore not other rights in the meaning of § 823 I BGB [references] or that economic aspects as a whole are being protected, although these are only given protection by the law of tort in special circumstances, e.g. by § 826 BGB; to protect either of these would be alien to the present legal system. In addition the need to enquire carefully in connection with the question of illegality whether, having regard to the principle of balancing the respective interests and duties, the defendant can perhaps rely on special grounds of justification [reference] has a restrictive effect. In fact the extent and the limits within which the right in an established and active commercial or industrial enterprise is to be protected must be determined precisely by an appropriate amplification of the notion that the interference must be direct.

Direct interference with the right in an existing commercial or industrial enterprise against which § 823 I BGB provides a remedy is only that which is somehow directed against the enterprise as such, i.e. which is aimed at the enterprise and does not affect rights or legal interests which can be detached from the enterprise without difficulty. All the cases in which the Bundesgerichtshof acknowledged that a right in an established and active commercial or industrial enterprise had been violated involved interferences of this kind which were aimed at the enterprise. Just as an injury to an employer or the destruction of or damage to a lorry belonging to an enterprise is not specifically connected with the enterprise, the cutting of the cable by the defendant or his employee operating the tractor is not so connected either; the defendants enterprise operating the excavator had damaged a power cable which apart from supplying power to the graphic working of M, almost by chance serves in addition the plaintiffs enterprise only, although it could equally well have been intended to supply electric current to other customers. Furthermore the supply of electric current by a cable and the right to receive it does not constitute a natural characteristic of an established and active commercial or industrial enterprise, but represents a relationship based on the duty to supply current incumbent upon the public supply undertaking, identical with that which connects, e.g. household and members of the professions with the electricity works. Consequently the fact that a cable has been damaged on land not belonging to the enterprise concerned resulting in a cut in the electricity supply cannot, in the absence of special circumstances which do not exist here, be regarded as an interference aimed at the area of operation of the enterprise concerned. It is true that when the defendants excavator cut the power cable leading to the plaintiffs factory, the material and technical bases were already affected whereby the plaintiff could and did receive electric power from the electricity works in accordance with the contract existing between them. However this does not constitute interference with an established and active commercial or individual enterprise; to do so would exceed the range of protection accorded to commercial or industrial enterprises by the practice of the courts; instead the issue involves a violation of property in the cable belonging to the electricity works and of the right of the plaintiff against the electricity works for the supply of electric power, limited by the latters general conditions of trade.

If, therefore, the plaintiffs claim cannot be based on a violation of his right to an established and active commercial or individual enterprise, it cannot be supported either, contrary to the view of the Court of Appeal, on the ground that the defendant had violated the required care of the safety of others [Verkehrssicherungspflicht].